It’s Comforting To Know That Cell Phone Companies Aren’t Only Ripping Off Their Customers

Sprint-Nextel Corp. (S) was sued for more than $300 million by the New York attorney general, who said the third-largest U.S. wireless carrier deliberately failed to pay sales taxes for seven years.

Sprint didn’t collect and pay some sales taxes on flat-rate access charges for wireless calling plans, costing state and local governments more than $100 million, Attorney General Eric Schneiderman said in a statement today.

“This case represents a new era in tax fraud prosecutions,” Schneiderman said at press conference today. “The deliberate failure to collect or pay your fair share of taxes will not be tolerated in New York state.”

Interestingly, the state’s case appears to have started as a whistleblower report. In 2005, New York State enacted a law — similar to the one used by the IRS — that affords protection to a tattletale whistleblower with inside knowledge of an employer or corporate fraud, while also allowing the private citizen to bring a lawsuit on behalf of the government and to receive up to 30% of the proceeds. That amounts to a cool $900K in the immediate case, which in NYC, would buy a fairly nice studio apartment.

The items in this blog are informational only and are not meant as tax advice. Consult with your tax advisor to determine how any item applies to your situation. A select group of Tax Professionals of WithumSmith+Brown write Double Taxation, and any opinions expressed or implied are not necessarily shared by anyone else at WithumSmith+Brown.

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